Smith just bought a house for $250,000. Earthquake insurance, which would pay $250,000 in the event of a major earthquake, is available for $25,000
Smith estimates that the probability of a major earthquake in the coming year is 10 percent, and that in the event of such a quake, the property would be worth nothing. The utility (U) that Smith gets from income (I) is given as follows: U(I) = I0.5. Should Smith buy the insurance? A) Yes.
B) No.
C) Smith is indifferent.
D) We need more information on Smith's attitude toward risk.
A
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Refer to Figure 8A.2. Compared to curve s1Y, curve s2Y represents
A) a decrease in depreciation. B) a decrease in original capital stock. C) a higher saving rate. D) a decrease in capital deepening.
Which of the following countries has lower total government tax revenue as a percentage of GDP than the United States?
a. Canada b. Germany c. Sweden d. Mexico
Suppose the United States sets a limit on the number of tons of sugar that can be imported each year. This is an example of a(n):
A. protective tariff. B. revenue tariff. C. voluntary export restriction. D. import quota.
Which set of characteristics below best describes the basic features of monopolistic competition?
A. easy entry, few firms, and standardized products B. easy entry, many firms, and standardized products C. easy entry, many firms, and differentiated products D. barriers to entry, few firms, and differentiated products